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Assume you have been hired to appraise a local hospital. Your best estimate of the reproduction ( or replacement ) cost of the building is

Assume you have been hired to appraise a local hospital. Your best estimate of the reproduction (or replacement) cost of the building is $3,700,000. However, upon evaluating the use of land in the local area, you have deemed the value of the site to be worth an additional $800,000. If the building has physically depreciated by $500,000 over its lifetime and there is an additional loss of $20,000 due to functional obsolescence, what is the indicated value of the hospital using the cost approach?

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